Latino Daily News

Mexico Expects to Start Oil Auctions in Early 2015

The Mexican government expects to hold the first auctions of oil fields for private investors in the first half of 2015, officials said.

High-level officials met with foreign correspondents on Tuesday to discuss the implementing regulations for the constitutional reforms approved last December to overhaul the energy industry.

Congress plans to review the laws to implement the reforms next month and “round one” of bidding is expected to take place in the first half of next year, Energy Undersecretary for Hydrocarbons Lourdes Melgar said.

State-owned oil giant Petroleos Mexicanos, or Pemex, is expected to identify the areas it wants to reserve for itself on Sept. 17 in what has been designated “round zero,” Melgar said.

Pemex will list both fields that are currently in production and areas it wants to explore, the official said.

The offerings will include deepwater, mature and other fields, Melgar said.

Foreign companies interested in operating in Mexico will be required to pay general, income and other taxes, Undersecretary for Revenues Miguel Messmacher said.

“Relatively moderate” royalty rates will also be set based on the type of auction and the price of crude, Messmacher said.

If the price of a barrel of crude, for example, is around $100, the royalty rate would be 10 percent, Messmacher said.

“We would not want it (the royalty rate) to be so high that it would leave otherwise profitable projects out,” the tax official said.

Contracts will have other features, depending on the type of auction, such as profit-sharing, production-sharing and licensing requirements.

Mexico expects its oil production to rise from 2.5 million barrels per day (bpd) today to 3 million bpd in 2018, Melgar said.

Pemex has enjoyed a monopoly over the Mexican oil industry, whose output has been falling for several years.